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Annual Adjustments of Civil Monetary Penalties for 2020

The Department of Labor (DOL) issued its 2020 annual adjustments of civil monetary penalties for benefits-related violations for employer-sponsored plans.

These annual penalty adjustments are derived from The Inflation Adjustment Act, which requires the DOL and other federal agencies to annually adjust their civil penalty levels for inflation no later than January 15 of each year. The 2020 adjustments apply for penalties assessed on or after January 15, 2020, for Employee Retirement Income Security Act (ERISA) violations occurring after November 2, 2015.

Additionally, the Department of Health and Human Services (HHS) announced another update for annual adjustments of civil monetary penalties that affect employer-sponsored plans within its jurisdiction. The previous update was released in November 2019. Perhaps this quick update reflects an effort to align the adjustments with the annual January 15 deadline. These adjustments are effective for penalties to assess on or after January 17, 2020, for violations occurring on or after November 2, 2015.

ERISA

2019

2020

Failure to Provide Secretary of Labor Requested Documentation $156 per day not to exceed $1,566 per request $159 per day, not to exceed $1,594 per request
Failure to File Form 5500 $2,194 per day $1,625 per day
Failure to File Annual Form M-1 for Multiple Employer Welfare Arrangements (MEWAs) $1,597 per day $159 per day, not to exceed $1,594 per request
Failure to Timely Distribute Summary of Benefits and Coverage (SBC) $1,156 $1,176
Genetic Information Nondiscrimination Act (GINA) Violation $117 per day $119 per day
Failure to Provide Notice and Information Regarding the Children’s Health Insurance Program (CHIP) $117 per day $119 per day

HIPAA

2019

2020

Tier 1: Lack of Knowledge Min: $117

Max: $58,490

Year Cap: $1,754,698

Min: $119

Max: $59,522

Year Cap: $1,785,651

Tier 2: Reasonable Cause and Not Willful Neglect Min: $1,170

Max: $58,490

Year Cap: $1,754,698

Minimum: $1,191

Max: $59,522

Year Cap: $1,785,651

Tier 3: Willful Neglect, Corrected Within 30 Days Min: $11,698

Max: $58,490

Year Cap: $1,754,698

Min: $11,904

Max: $59,522

Year Cap: $1,785,651

Tier 4: Willful Neglect, Not Corrected Within 30 Days Min: $58,490

Max: $1,754,698

Max: $59,522

Year Cap: $1,785,651

Medicare Secondary Payer

2019

2020

Offering incentives to Medicare-eligible individuals not to enroll in a plan that would otherwise be primary $9,472 $9,639
Responsible reporting entities failure to provide information identifying situations where the group health plan is primary $1,211 $1,232
Willfully or repeated failure to provide requested information regarding group health plan coverage $1,542 $1,569

For a complete list of the DOL annual adjusted penalties, please refer to the Federal Register by clicking here. HHS annual adjustments can be found here.

The penalties above relate to a wide range of compliance issues, but not all violations will give rise to the highest permitted penalty. The DOL still has discretion to impose lower penalties, such as the delinquent filer voluntary compliance program (DFVCP), which is designed to encourage Form 5500 filings. Taking the proper steps to avoid these penalties is important even if the DOL offers ways to lower penalty amounts. The penalty amounts can add up quickly and provides a strong incentive for employers to remain in compliance.

Staying on top of compliance obligations can be a challenge. Allow our team of compliance leaders support your efforts and register for the upcoming webinar: HIPAA Privacy & Security: Refresher to Catch New Breach Sources, on February 20.

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